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New compulsory dispute resolution process for Domestic Building disputes coming into effect on 26 April 2017

Conciliation of domestic building disputes prior to VCAT proceedings will be compulsory from 26 April 2017.

Various provisions of the Building Legislation Amendment (Consumer Protection) Act 2016 came into effect in July and September 2016. They introduced changes to the Building Act 1993 (Vic) and the Domestic Building Contracts Act 1995 (Vic) relating to regulation of owner builders, offences for undertaking building work without, or contrary to, a building permit, and the requirement for a building surveyor not to accept an engagement where they have a conflict of interests.

On 27 March 2017, further provisions were proclaimed and will come into effect on 26 April 2017. The newly proclaimed provisions amend the Domestic Building Contracts Act 1995 (Vic) and some complimentary changes are also made to the Building Act 1993.

From 26 April 2017 all domestic building disputes must be referred to without prejudice conciliation before VCAT proceedings are permitted to be issued, unless urgent injunctive relief is sought. Rules for the Conciliation process will be published on the Consumer Affairs Website.

A significant amount of the conciliation process is regulated by the changes to the legislation. A Chief Dispute Resolution Officer will be assigned to manage the conciliation and has the power to order inspection, rectification and completion of works. Inspection reports prepared by assessors during this process can be used as evidence in any subsequent VCAT proceeding.

A new authority will administer and oversee the conciliation process, to be known as Domestic Building Dispute Resolution Victoria (DBDRV).

More changes coming

The Victorian Government has also flagged further changes yet to come. The Building Amendment (Enforcement and Other Measures) Bill 2016 was introduced into Parliament in December 2016. It proposes tougher penalties for illegal building works, including significant fines and, in some cases, gaol time. It also addresses findings and recommendations from the Auditor-General’s report relating to building practitioner registration, the building permit levy system, and the role of local government.

Significantly for many building companies, the Bill also proposes that certain corporations be eligible to apply for registration as a building practitioner. The corporation will need one or more “nominee directors” who are registered under the Building Act and whose combined registration authorises the carrying out of work for each class of registration sought by the corporation.

The Bill was introduced to the Victorian Upper House for debate in early March 2017.

Comments

These changes reflect the Victorian Government’s ongoing efforts to protect consumers involved in the home building process. It is hoped the new compulsory conciliation process will help to minimise the costs of domestic building disputes, which costs can otherwise quickly become disproportionate to the value of the matters in dispute.

The significant powers delegated to Chief Dispute Resolution Officers, exercised wisely, should assist parties to resolve disputes pragmatically rather than allowing the matter to become an entrenched dispute which sees costs escalate. We will encourage our clients to approach the conciliation process optimistically and in good faith, as participation by parties on this basis has the best chance of minimising costs and seeing the dispute resolved quickly and efficiently to the satisfaction of all involved.